The Steinhoff Saga Management review - University of Stellenbosch Business School

January – June 2020

Carrots & Sticks 2020 – Sustainability Reporting Policy: Global trends in disclosure as the ESG agenda goes mainstream

  • By the Global Reporting Initiative (GRI) and University of Stellenbosch Business School (USB)
  • JULY 2020


What is the report about?

The Carrots & Sticks (C&S) reports take stock of the regulatory landscape of non-financial and sustainability reporting. It shows how sustainability reporting has become more mainstream and more mature over the years.

The 2020 edition of this report gives public and private sector users an overview of hundreds of reporting provisions covering more than 80 countries, including the world’s 60 largest economies. This includes mandatory and voluntary requirements and guidance from regulators, capital markets, professional associations, industry bodies and other organisations.

The ESG&E (environmental, social, governance, & economic and general) agenda continues to provide reporting topics. Climate change, human rights, labour and anti-corruption are dominant themes among disclosure requirements.

Carrots & Sticks is an initiative of the Global Reporting Initiative (GRI) and the University of Stellenbosch Business School (USB), with contributions by the UN Environment Programme (UNEP).

What did the report find?

Key findings of C&S 2020 include the following:

  • The UN’s Sustainable Development Goals (SDGs) have become a global framework that influences policy development. Yet, very few of the policies covered in the 2020 C&S report explicitly refer to the SDGs. The SDGs most often addressed in reporting provisions are SDG 12 on responsible production and consumption, SDG 16 on inclusive societies and accountable institutions, as well as SDG 8 on decent work and economic growth. Few provisions provide for business disclosure on SDGs 3 to 4, linked to health and education, although the Covid-19 pandemic may change this. As one interviewee said, “The SDGs are useful in two ways. Firstly, companies can measure and report their impacts in relation to the SDGs and implement new ideas that improve the business, reducing their footprint and minimizing overall negative impacts. Secondly, organizations can use the SDGs as inspiration and design criteria for new product development and business process innovation, developing products and services that contribute to solving real global challenges while meeting human needs.”
  • Europe continues to drive the ESG disclosure agenda, accounting for 245 reporting instruments, while the Asian markets (174) are increasingly active. North America has a low number of reporting provisions (47), a fact that in part reflects the lower number of national jurisdictions in North America. At country level, higher numbers of reporting provisions, including reporting requirements and resources, were found in the UK, Spain, USA, Canada, Brazil, Colombia, Japan, China, India and South Africa.
  • Most reporting provisions are issued by governmental bodies, rising by 74% since 2016 to almost 400, while engagement by financial market regulators including central banks has also grown significantly. Provisions targeting the private sector, and in particular large and listed companies, account for around 90% of the C&S 2020 listing. Provisions that apply to SMEs and the public sector are largely unchanged since the 2016 C&S report.
  • The disclosure of decision-useful information is becoming increasingly important to decision makers and stakeholders of reporting organisations. Greater collaboration is therefore needed among standard setters, reporters, information users, regulators and policymakers to streamline requirements and improve the quality of disclosure. Also, agreement on the preferred disclosure format is still lacking.

The 2020 Carrots & Sticks report primarily targets policymakers from the governmental, regulatory and non-profit communities. It supports their drive to develop regulatory frameworks and requirements that secure the disclosure of more relevant information. This in effect supports accountable stewardship, leading to a more sustainable future.

More about the report

  • Carrots & Sticks 2020 – Sustainability reporting policy: Global trends in disclosure as the ESG agenda goes mainstream. Global Reporting Initiative (GRI) and the University of Stellenbosch Business School (USB).
Download full report

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